ABSTRACT
The agreement to establish the UN Framework Convention on Climate Change (UNFCCC) at the 1992 Rio Earth Summit saw the beginning of formal negotiations to reduce emissions of greenhouse gases in order to avoid the risks of dangerous anthropogenic climate change. In 1997, the Kyoto Protocol committed industrialized countries to binding greenhouse gas reductions based on their 1990 emissions, but eased the task through creating a market that would allow countries to trade emission reductions or to purchase emission reductions from projects in Eastern Europe (Joint Implementation – JI) and the developing world (Clean Development Mechanism – CDM) rather than make them domestically (Liverman 2009). Around the same time private sector companies and NGOs were creating a parallel voluntary market that would allow firms and individuals to compensate for their emissions by purchasing credits from emission reduction projects in the developing world. The emission reduction credits from the CDM and the voluntary market became known as “carbon offsets.” The first official carbon offset was a voluntary agreement between an American Electric Utility and a forestry project in Guatemala in 1989 (Bayon et al. 2007). Because deforestation is a major source of greenhouse gas emissions and new forests absorb carbon dioxide, reforestation was covered under the CDM. However, forest protection could not generate credits under Kyoto, and it was not until the UNFCCC negotiations in Bali in 2007 that proposals were made to allow credits for Reducing Emissions from Deforestation and forest Degradation (REDD) within the international climate regime (Neeff and Ascui 2009).
